Mike Savage today=
IBM just released their quarterly report and it shows that this is the 13th straight quarter of declining sales. As Art Cashin tried to bring up the financial engineering (share buybacks, etc.) on CNBC he was quickly shut down and another topic brought up to make sure that people don’t focus on facts.
My belief is that the latest credit bubble has been pierced and the air leaking is leaking from China’s dual bubbles- stock and property markets. In an article by Mark Magnier in the Wall Street Journal he notes that China’s factories have been shedding jobs for 20 months in a row. If there is less manufacturing there will be less of a need for raw materials and less finished goods being shipped. This also leads to lower sales and lower profits. This is as the Chinese stock markets were flying to all-time highs. The markets didn’t even remotely resemble the underlying economy. Sound familiar?
This would explain shipping rates being at historically low levels, commodity prices sliding and most companies missing their projections mainly on the revenue (sales) side.
Back in 2008 gold acted as the canary in the coal mine. Gold warned that some severe deflation was on the way. Shortly thereafter credit markets seized up, stocks, bonds and all assets were sold to pay the margin clerk and a financial black swan was underway. My take is that this was a warning that no one saw because of the already simmering problems with MBS (mortgage backed securities), subprime loans, etc. while the Fed said “all was contained”.